The Purpose and Nature of Business Flashcards
What is a business?
An organisation which trades to make money
What is a product?
Anything that is capeable of satisfying customer needs, it is tangible and can be touched
What is a service?
An act that a business person carries out for you in exchange of money
What is opportunity cost?
When making important decisions in business, the cost of not selecting an alternative is an opportunity cost
What is a social enterprise?
It’s a business which has an objective of helping people and the planet rather than making profit
What is enterprise?
A company or a business
What is an entrepreneur?
Anyone who has a business idea and develops it
What is a sole trader?
A sole trader is a business which is run by only 1 owner. They can employ people but aren’t involved in the business is often small
What is unlimited liability?
It means that the business and the owner are one legal entity
What is a partnership in a business?
Partners are all joint owners of the business and share the profit of the business
What is Limited liability?
Limited liability protects a business owner’s personal funds from being used to pay business debts.
What is a limited company?
Shares cannot be bought by the public, the share issue is limited ro friends and family who can buy shares in the business
What is the equation for revenue?
Price x Quantity
What is the equation for Gross profit?
Sales revenue - Cost of sales
What is a stakeholder?
Anyone who has an interest in a business and is affected by the actions of the business
What is a business plan?
A document which sets out the future plans for a business and what they want to achieve
What is Organic growth?
Organic growth means that the business has grown from within
The business has grown by itself without needing a merger or takeover with another business
What is inorganic growth?
A business may decide to grow quicker and so it will decide to merge or takeover another business
